Russian economy grows 0.8%, avoids technical recession

Russia's gross domestic product (GDP) increased by 0.8 percent between April and June, compared to the same period last year, according to a preliminary estimate by Russian statistics bureau Rosstat.

The announcement
was made by Rosstat on Monday, and is only a preliminary reading.
A final, revised calculation will follow.

The growth is enough to escape falling into a technical recession
(two consecutive quarters of contracted growth) but still
disappoints the Ministry of Economic Development’s baseline
estimate that the Russian economy would grow by 1.1 percent in
the second quarter.

In the first quarter of 2014, between January and March, Russia’s
seasonally adjusted GDP fell by 0.5 percent.

Economy Minister Aleksey Ulyukaev says an optimistic GDP all of
2014 in total will be 1.1 percent, but previously stated that he
wouldn't be surprised if growth was negative. Russia’s Central
Bank estimates that growth will be 0.5 percent. Growth for 2015
is slated at a 2 percent increase, according to Ulyukaev.

Russia’s largest state-owned banks are now locked out from buying
new debt on EU and US capital markets (except under 90 days)
after the latest sanctions that target Russia's key sectors-
finance, energy, and weaponry.

Sberbank, Russia’s largest bank, estimates that sanctions will
reduce the country’s GDP by 1 percent in 2014.

Capital outflow remains a major concern for Russia, as the ruble
continues to weaken. Since 2014, the ruble has lost more than 9
percent against the dollar.

Russsia’s Central Bank is so far dealing with inflation by
raising its key interest rate. The International Monetary Fund
predicts consumer prices in Russia will rise between six and 14
percent in 2014.